The Great Resignation Begins to Reverse Course. This is why.

When the pandemic first hit, Celeste Lyons quit her job at a law firm in Connecticut and began staying home, living off retirement savings and an inheritance from her parents while trying to avoid getting sick. She eventually wanted to go back to work, but it was nearly two years before Lyons, 63, started a new job as a real estate analyst, a position that allows her to work from home as Covid-19 cases spike.

“I got tired of spending my retirement money. I thought, ‘I have to increase my account,’” Lyons says of his decision to return to work. In addition, he adds, during all that time at home, “I was very bored.”

Lyons is among the millions of Americans who dropped out of the workforce amid the coronavirus pandemic and spent months grappling with whether and how to return to work as fears abounded over the virus, the child care system of the The country collapsed and the ad hoc nature of work-from-home policies caused a national reckoning over what kind of work and pay people were willing to accept. The generous federal stimulus and unemployment benefits, at the same time, provided an additional source of income for many.

But with Americans’ fears about the coronavirus plummeting, schools returning to in-person instruction and excess savings dwindling, some of the biggest factors fueling what’s known as the Great Quit are beginning. decrease. The result is a small but significant increase in the labor force participation rate over the past six months and a slowdown in the proportion of Americans quitting their jobs, two dynamics that economists expect to accelerate as the market labor, like much of American society, accelerates. moving towards post-pandemic normality.

After months with little improvement, the labor force participation rate has been rising since the fall and even faster in recent months, rising 0.4 percentage point in the three months ending in February as 1.87 million people re-entered the workforce. That’s triple the 621,000 who returned in the previous three months.

Perhaps the most prominent official indication that the tides may be turning was the recent release of Labor Department data showing that the percentage of workers who quit their jobs in January fell to 2.8%, down from 3%. in each of the previous two months.

And that trend likely continued through February as well, according to data from Gusto, a payroll processor that works with more than 200,000 businesses and releases monthly “quit” data faster than the government. Among Gusto cloud-based platform workers, the proportion of people who quit their jobs fell 0.6 percentage point between January and February to 3.1%, the data shows, matching the same rate as in February 2020, just before the pandemic hit.

“We’re at a point where resignation is a continuing presence in the economy,” said Gusto economist Luke Pardue. Barron’s“But it’s not likely to have a much larger presence in the coming months.”

The improvement in the country’s workforce participation and quit rate will be due in large part to the fact that the pandemic itself is fading, at least for now, reducing Americans’ worries about contagion from Covid. Three in four Americans say they are ready for the country to open up, according to an Ipsos survey from mid-March, and more than half say they are back to their normal routines or will in the next six months. And the proportion of Americans who see the virus as a “serious” local risk has dropped to an all-time low of 17%, polling firm Morning Consult found.

That helps clear the way for Covid-wary Americans like Lyons to return to work as they begin to feel more secure on their commute or in the office.

“It seems, at least psychologically, that Omicron was just this breaking point for a lot of people, where it seems like you can’t avoid” the virus, says Nick Bunker, director of economic research for North America at job search site Indeed. . . “There is this re-engagement period.”

Schools are also reopening for in-person instruction, as Covid case numbers drop and restrictions are lifted, a change that has allowed more working parents, and mothers in particular, to return to work full time.

As of September, the employment rate for mothers of young children was 3.4 percentage points below its pre-pandemic level, while the same rate for women without young children was 2.3 percentage points below. . But mothers have since returned to work faster than their peers, according to Bunker Labor Department microdata analysis, and their recovery rate is now roughly equal to that of men and women without young children. Continued improvement there would boost overall participation while signaling that the barriers holding back a return to work for many Americans are being eased.

Accelerating the return is also the spending of excess savings, which had skyrocketed during the pandemic but, for households in the bottom 40% of the income distribution, is likely gone, along with the cost of living. is increasing. . A Moody’s analysis in January estimated that those households had about $350 billion in excess personal savings, but forecast that it would be gone by the end of this month. “Financial pressure to return to work will be strong,” wrote Mark Zandi, chief economist at Moody’s Analytics.

For the wealthiest Americans, recent stock market volatility may have dealt the hardest blow, hitting investments and 401(k)s as testing the resilience of the new crop of day traderswho had been supplementing his income with apps like



Robin Hood
.

The share of retired workers returning to work has risen sharply in the past two months, a possible indication that Americans are looking to bolster their retirement savings.

Scott Williams left his government job working in aviation outside of Jacksonville, Florida, in February of last year, cashing in $50,000 in stock and planning to retire early while hanging out with his kids and playing golf. But within six months, Williams, now 50, grew tired of the quiet and his former colleagues began asking him to come back. Meanwhile, his stock portfolio “started going downhill,” he says, and he returned to his position almost exactly a year after he left.

Retirement isn’t all it’s cracked up to be, says Williams. “It’s nice not to have to go to work, but what are you going to do?”

Perhaps more simply, after a record 48 million Americans quit their jobs last year, the Great Quit may be starting to slow because the workers who most wanted to head for the exits have already left, economists say. . While 29% of workers are actively looking for a new job, according to a Grant Thornton workforce survey due out in April, that’s down from the 33% who were actively looking in October.

“Some of the changes are over: People made their moves and found better jobs and better pay,” says Zandi, the Moody’s economist. “I don’t think they want to move every six months or a year. I think they will accommodate.

write to Megan Cassella at megan.cassella@dowjones.com

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